Can someone give me a definitive answer if MIP can be removed from an FHA Loan once there is 20% equity?
We bought a house for about 100,000 and now after 4 years it is worth about 180,000. Are we no eligible to have our MIP dropped from our loan. I am hearing so many mixed answers regarding this and would appreciate hearing from someone well versed in the area.
Tags: answer, definitive, Equity, from, give, Loan, once, removed, someone, there
2011/10/16 at 21:35:05
You can not remove the MIP from an FHA loan until the end of the 5th year no matter how much equity you have. FHA will also base the amount of equity you have in the property off the original purchase price, not the current market value. After the fifth year, if you have at least 22% equity in your home based upon the original purchase price, then you could have the MIP removed. For instance, say you bought the home for 100,000, if your current loan balance is at 78,000 at the end of the 5th year, then you could have the MIP removed. Since your property is worth much more than you paid for it and you want to remove your MIP, my suggestion would be to do an FHA streamline refinance. However, if your home is a condo, you can not get out of paying MIP. You will always have to pay the MIP no matter how much equity you have if your home is a condo. As long as you are not in a condo, you probably should refinance to remove the MIP. If you need help with this or need more information, feel free to email me..jasonsheaffer@comcast.net
2011/10/16 at 21:02:38
Usually once your house 20% of equity, you can write a “certified” letter to your mortgage company requesting for them to cancel your mortgage insurance.
Your mortgage company has 30 working days to respond to your request in “writing”. Do not accept “phone calls”. If they do call you can simply request for them to send you in writing their foundings.
Good Luck……